Leaving Equities for Safer Ground
April 2, 2024
The DOW, S&P 500 and Nasdaq are 1.0% or more in the red today. Equity markets in Germany, France and Italy are down by a similar magnitude, while the Japanese and Australian share prices have barely moved.
Comparatively hot activity and price data have unnerved investors’ appetite for risk, and the start of a new quarter is a convenient opportunity for taking stock of economic fundamentals.
Sovereign debt yields this Tuesday have extended Monday gains. Compared to pre-Easter quotes, 10-year yields are up 17 basis points in the United States, 11 bps in Germany, 15 bps in Great Britain and 4 basis points in Japan.
Bitcoin, which once again is proving to be a fair weather friend, has slumped today by an additional 5.7% in price. Oil, on the other hand, has advanced 1.3% to its highest price since October, and gold is closing in fast on the $2,300 per ounce level.
In overnight trading, the dollar fell 0.3% against the euro, 0.4% relative to the Australian dollar and 0.1% against the Japanese yen and sterling.
Minutes from the March 19th Reserve Bank of Australia Board meeting, which left its Official Cash Rate unchanged at 4.35%, affirmed that recent economic developments had pretty much conformed to expectations but also opined that significant potential forecasting risks prevent officials from signaling coming policy changes with any precision. The process will be done on a meeting-to-meeting basis.
Many March manufacturing purchasing manager surveys got reported today from countries that are coming off the extended Easter break.
- Although revised 0.4 points above the preliminary estimate, Euroland’s reading of 46.1 constitutes a 3-month low and signifies a pronounced recession in the factory sector. One silver lining is that Red Sea tensions are exerting less damage to delivery times.
- Within the euro area, Greece, Spain, and Italy scored PMIs above the 50 level that separates improvement from deterioration, but the readings for Germany, Austria, France, and Ireland were each below February levels and ranged from 41.9 in Germany to 49.6 in Ireland. The Dutch PMI was also a tad below 50 but at a 19-month high.
- The British manufacturing PMI was revised 0.4 points above its preliminary March indication to a 20-month high of 50.3.
- India’s PMI was revised 0.7 points lower but at 59.1 signified the fastest factory growth in 193 months.
- South Africa’s Absa-compiled PMI fell from 51.7 in February to 49.2 last month and was the sixth sub-50 score in the past 8 months.
- Australia’s manufacturing PMI was revised 0.5 points upward to 47.3, which nonetheless was its lowest since May 2020.
- In Eastern Europe, Hungary’s March PMI matched February’s 9-month high of 52.3; the Czech PMI climbed 1.9 points to a 19-month high of 46.2; and Poland’s 48.0 reading was its highest in 4 months.
- Switzerland’s 45.2 PMI reading in March increased for a fifth straight time since printing at a lowly 40.6 last October.
- Sweden’s perfectly neutral 50.0 PMI reading broke a string of 20 straight scores below that threshold, while Norway’s 50.8 was above 50 for a fifth straight time, albeit to the least extent since November.
- Singapore’s manufacturing PMI of 50.7 last month was the seventh straight reading of at least 50.
U.S. factory orders grew by a faster-than-projected 1.4% in February. Orders in the first two months of 2024 were 1.0% above the year-earlier level. Job quits increased in both January and February, a sign that the labor market is still tight. Job openings and hires during February also exceeded January levels.
Although posting a 0.4% monthly increase for a second straight month in March, the 12-month German consumer price inflation rate receded 0.3 percentage points further to a 34-month low of 2.2%. However, both service sector inflation of 3.7% after 3.4% in the prior month and core CPI (which excludes food & energy) climbed to 3.5% from 3.4%.
South Korean consumer price inflation held steady in March at February’s
Brazilian producer price inflation printed below zero percent for the twelfth straight month in February, this time at -5.2%.
February PPI inflation in Hungary and Romania chimed in at -4.3% and -6.3%. In Hungary’s instance, that was a record negative reading and down from a record high of +51.0% touched in August 2022.
The British Nationwide house price index posted a bigger 1.6% year-on-year rise in March after only emerging from a streak of sub-zero readings in January that included a 12-month 5.3% drop last September. Shop prices in the U.K. were 1.3% higher in February than a year earlier, which was their smallest such increase since the last month of 2021.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German CPI, Manufacturing PMIs
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